You received a Trademark Infringement Letter. Now what?

What to Do After Receiving a Trademark Infringement Cease and Desist Letter 

If you have received a cease and desist letter asserting trademark infringement, you may be feeling uncertain about your next steps. A cease and desist letter can be intimidating, but understanding its implications and how to respond can make a significant difference for your business. This article aims to provide you with an overview of what to expect, how to respond, and what considerations to keep in mind regarding trademark law.

What Does a Trademark Infringement Cease and Desist Letter Mean?

A trademark cease and desist letter is a formal notice from a trademark owner alleging that your use of a particular mark is infringing upon their trademark rights. This could involve the unauthorized use of a federally registered trademark, a trademark registered with a state government, or an unregistered trademark in which the owner believes they have established trademark rights through their use of the mark in commerce. The letter typically demands that the infringing party stop using the allegedly infringing trademark, remove any infringing materials, and potentially provide compensation for damage they believe they have suffered as a result of the alleged infringement.

The trademark owner's goal in sending a cease and desist letter is to enforce their proprietary rights without immediately resorting to a lawsuit. If you are a business owner who has received such a letter, you must act quickly to evaluate the claims, as ignoring the demand could lead to further legal action or a lawsuit.

Evaluating the Trademark Infringement Claims

Trademark infringement occurs when a party uses a mark that is likely to cause confusion with a trademark owner’s mark or that causes actual consumer confusion between infringing party and the trademark owner. The infringing mark must be used in commerce in a manner that is likely to cause consumer confusion.  This typically means that the mark is the same or similar and is used by the alleged infringer in connection with goods or services that are related to the trademark owner’s goods or services. Infringement can occur even if the marks or the goods and services are not identical.

Trademark Rights and Trademark Protection

Trademark rights can arise from both federal registration and common law rights through actual use in commerce. This means that a trademark owner with an unregistered trademark may still have enforceable rights, especially if they have been using the mark continuously for a substantial period of time that began prior to your use. Trademark infringement can be intentional or unintentional. The key consideration is whether the trademark use causes actual consumer confusion or is likely to cause consumer confusion with the trademark owner’s business and reputation.

Likelihood of Confusion Analysis

To properly assert a claim of trademark infringement, the trademark owner must demonstrate that their trademark is valid, protectable, and that your use of the mark creates a likelihood of confusion with their trademark. The likelihood of confusion standard is central to trademark infringement analysis, and courts rely on several factors to make this determination, as articulated in In re E.I. du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973) ("DuPont factors"). These factors include:

1. Similarity of the Marks: How similar is your mark to the trademark owner's mark in appearance, sound, or meaning?  The more similar they are, the higher the likelihood of confusion.
2. Similarity of the Goods/Services: Are the goods or services offered under the marks similar, and are they marketed to the same consumers?
3. Strength of the Mark: Is the trademark owner's mark well-known or distinctive?
4. Evidence of Actual Confusion: Is there evidence that consumers have already been confused between your mark and the trademark owner’s mark?
5. Marketing Channels Used: Do you and the trademark owner use the same marketing channels?  Marketing channels are the methods and platforms through which goods or services are promoted, sold, and distributed.  Examples include physical stores, online platforms, catalogs, wholesale distribution, television, and events.
6. Intent of the Alleged Infringer: Did you act recklessly, or were you aware of the trademark owner's mark prior to using your own mark?
7. Degree of Care Exercised by Consumers: Would the typical consumer be likely to exercise care, reducing the chance of confusion?

Both federal and state courts and the United States Patent and Trademark Office (USPTO) use these factors or a similar set of factors to determine whether there is an infringement. If the trademark owner can establish a likelihood of confusion, then you, as the alleged infringer, could be liable even if you were unaware that your activities infringed on someone else’s trademark rights.

Potential Consequences of a Trademark Infringement

The trademark owner who has suffered damage from the unauthorized use of their trademark may pursue legal action, including filing a complaint in state or federal court. Remedies that may be available include:

• Monetary Damages: Compensation for losses due to the infringement, including plaintiff's lost profits or disgorgement of defendant's profits.
• Attorney's Fees: Under certain circumstances, the trademark owner may be entitled to recover attorney's fees if the case goes to court if infringement is willful.
• Injunctions: A court order requiring you to stop the infringing trademark use.
• Seizure of Infringing Goods: The court may order the seizure or destruction of goods bearing the infringing mark.

In some cases, the infringing party may negotiate a settlement and/or a license to use the trademark owner's mark, but this would depend on the willingness of the parties to come to an agreement.

Steps to Take After Receiving a Cease and Desist Letter

1. Consult a Trademark Attorney: You should consult with a trademark attorney experienced in trademark dispute matters at the earliest possible time. An attorney can evaluate the validity of the claims in the letter, advise you on the strength of your position, and help you determine the best course of action. Your direct communication with the opposing party or their attorney after receiving the trademark cease and desist letter can result in admissions or other communications that are harmful to your position.
2. Evaluate the Claims: The trademark attorney will review the trademark rights asserted in the letter, including any federal registration or common law rights, determine whether any asserted trademark registration corresponds to an active and enforceable trademark registration, and determine whether your use of the mark pre-dates the trademark owner's registration and/or unregistered use of the mark. This information will define the parties respective rights in their uses of their marks.
3. Formally Respond to the Letter: The attorney will likely formally respond to the cease and desist letter within a reasonable time. Cease and desist letters often include a response deadline, which may or may not be reasonable. Typically, when you engage an attorney to assist with a response to a cease and desist letter, the deadline in the letter can be extended. If no attorney is engaged, the trademark owner may be less inclined to grant an extension. In any event, a response to the cease and desist letter should be sent, even if the infringement is highly dubious. A failure to respond to a cease and desist letter may result in additional legal action, including a federal lawsuit. Your attorney will draft a response that addresses the key issues raised by the cease and desist, presents your defenses in the strongest possible terms, and suggests potential resolution.
4. Determine Your Options: Depending on the situation, the response to the letter may include agreeing to cease the allegedly infringing activities, negotiating a license agreement, or challenging the validity of the trademark owner's rights. In many cases, if the asserted trademark rights are weak or invalid, you may seek a declaratory judgment from a court requesting a determination that your mark does not infringe the trademark owner's mark.

Alternative Dispute Resolution Methods

Trademark disputes can be resolved through alternative dispute resolution (ADR) methods, such as mediation or arbitration, which can provide a more efficient and cost-effective alternative to litigation. These methods allow the trademark owner and the infringing party to negotiate a mutually agreeable outcome with the help of a neutral third party, often avoiding the complexities and expenses of a federal lawsuit. Mediation, in particular, encourages open dialogue and may lead to creative solutions, such as licensing agreements, while arbitration offers a binding resolution that can be reached more quickly than a traditional court proceeding. Considering ADR as a tool resolving trademark disputes can save both parties significant time and money, potentially leading to a satisfactory resolution.

The Risks of Ignoring a Cease and Desist Letter

Ignoring a trademark cease and desist letter is a risky strategy due to the potential escalation to litigation. If you fail to respond, the trademark owner may escalate the situation by filing a complaint in state or federal court. This can lead to costly litigation, potential monetary damages, and even a court order requiring you to stop using the mark.

Trademark infringement occurs under federal law, specifically the Lanham Act, even if you were unaware of the trademark owner's rights. Acting recklessly or failing to ensure that your mark does not infringe the asserted mark could lead to significant liability. Furthermore, if the trademark owner proves that you acted in bad faith, you could also be liable for attorney's fees and other penalties.

Avoiding Trademark Infringement

To avoid trademark infringement, always conduct a thorough search of existing trademarks before adopting a new mark. This search should include registered trademarks and common law uses to ensure your mark is unique and not likely to cause confusion with an existing one. Additionally, evaluate whether your proposed mark may be similar to registered or unregistered marks in the same industry. If there is any uncertainty about the availability or strength of a proposed mark, it is probably time to consider modifying the mark or choosing a different mark.

How a Trademark Attorney Can Help

A trademark attorney can help you understand the complexities of trademark law, including how trademarks are established, enforced, and protected under federal law. Whether you need to respond to a cease and desist letter, defend against claims of infringement, or explore options for a license or other settlement, having experienced legal counsel is essential.

It is important to note that cease and desist letters are often sent to assert claims before initiating formal legal action. How you respond can significantly affect the outcome of the case and your business's ability to continue using its mark. By consulting an attorney and developing a strategic response, you can mitigate the risks and protect your brand.

Stay Calm and Seek Help

Receiving a trademark infringement letter can be daunting, but it is important not to panic. By understanding your rights, evaluating the allegations carefully, and promptly seeking appropriate legal counsel, you can make informed decisions about how to respond. Whether you choose to challenge the claims, negotiate a settlement, or cease the infringing activities, you should act promptly and strategically to protect your business and intellectual property.

For more information, contact our office for a free consultation with a trademark attorney who can guide you through the process.

This article is for informational purposes only and does not constitute legal advice.